Govt rules out immediate cut in petroleum prices

New Delhi: Government on Tuesday ruled out immediate cut in petroleum prices but promised to review if global crude prices fall below $67 a barrel.

“Our administered prices of petrol, diesel, LPG and kerosene are based on Indian basket calculated at $67 a barrel. Reduction in crude oil prices has helped but not helped to the point where we can roll back the prices,” Finance Minister P Chidambaram said in reply to a discussion on the Supplementary Demands for Grants.

Chidambaram said when price comes down to $67 a barrel, then oil companies are breaking even.

“Even at 71 or 72 dollars a barrel, there is an element of subsidy. There is under-recovery. Under-recovery has come down, but we are not making any profit,” he said.

“We sincerely feel that the prices will come down. When that comes down, the Government at appropriate time will take appropriate decision,” he said.

Chidambaram said at the moment the need is to stimulate economy. The RBI’s move to cut short-term lending rate, repo, and mandatory deposit requirements of banks (CRR) is intended to stimulate the economy.

At the same time, inflation also needs to be paid attention, he said while noting that inflation is still high.

“I can see inflation is still high, but the benefits of decline in crude oil prices, decline in commodity prices will bear fruit in weeks and months to come,” Chidambaram said.